Jayson Products Uses a Perpetual Inventory System

question 27

Multiple Choice

Jayson Products uses a perpetual inventory system. At year-end, the Inventory account had a balance of $280,000, but a complete year-end physical inventory indicated goods on hand costing only $273,000. Jayson should:

• A) Reduce its cost of goods sold by $7,000.
• B) Record a $7,000 current liability.
• C) Reduce the balance in its Inventory controlling account and inventory subsidiary ledger by $7,000.
• D) Reduce the balance in the Inventory controlling account and record a current liability, both in the amount of $7,000.

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Definitions:

Fate

The development of events beyond a person's control, regarded as predetermined by a supernatural power.

Stress

A physical, mental, or emotional factor that causes bodily or mental tension and may be a factor in disease causation.

Crowded

Characterized by a high density of people or objects in a particular area, often leading to a sense of limited space.

Type A Personality

A behavior pattern characterized by competitiveness, urgency, aggression, and a constant struggle to achieve more in less time.